Social, economic undercurrents surface at Manesar plant

Wages, work conditions and the temporary workers are a recurrent theme in the Maruti story
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First Published: Thu, Jul 26 2012. 12 27 PM IST

Updated: Tue, Jul 31 2012. 01 00 PM IST
New Delhi/Mumbai: Awanish Kumar Dev was murdered eight days ago. His legs were broken, and he was left in a room that was then set on fire. Dev’s mistake was being in the wrong place at the wrong time. The 50-year-old human resources (HR) manager at Maruti Suzuki India Ltd’s Manesar plant was merely doing his job—serving as the interface between workers and management.
photoIt still isn’t clear who killed Dev, who is survived by his wife and 16-year-old son. The company blames the workers’ union. The union has washed its hands of the matter, and in a move that would have been funny had it not involved the death of an individual, sought a probe by the Central Bureau of Investigation.
Dev wasn’t the first white-collar company executive who died at the hands of militant workers on factory premises. In September 2008, L.K. Chaudhary, India division chief executive officer (CEO) and managing director at Italian auto parts maker Graziano Trasmissioni SpA, was killed by retrenched workers at its factory in Greater Noida near New Delhi. One year later, in Coimbatore in Tamil Nadu, Roy J. George, vice-president (HR) at auto instruments maker Pricol Ltd, was lynched in labour unrest.
After Dev’s death, CEOs in India are looking at the deeper malaise—social and economic—reflected by the incident at Maruti’s Manesar plant.
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Why did violence erupt at Maruti’s Manesar factory and what can be done to prevent more clashes between workers and managers across India? Here’s a look
The Indian Express newspaper reported Wipro Ltd chairman Azim Premji as saying on Monday that the violence at the Maruti factory was a sign of “social unrest building up in the country”. He went on to qualify his statement with a reference to slowing economic growth and rising unemployment.
While the identity of the individuals who brutalized Dev and left him to die in a burning room isn’t known, what is becoming clear is a picture of a hard-nosed and cost-focused management; legions of temporary workers without the benefits enjoyed by their tenured colleagues who sometimes did the same work; low wages that couldn’t keep pace with soaring inflation; a trade union movement gone wrong; an ecosystem in which nearly everyone other than the temporary workers had a stake; and, of course, that usual suspect, the country’s antiquated labour laws.
Manufacturing malaise
In 1991-92, manufacturing accounted for 16.16% of India’s then Rs 11.4 trillion economy. In 2011-12, it accounted for 13.9% of a Rs 82.3 trillion economy, according to the ministry of statistic and programme implementation and the Reserve Bank of India.
In this period, manufacturing hasn’t just receded from the economic mainstream, it also seems to have receded from the political mainstream.
Thus, if the 1970s and 1980s were all about a politically backed trade union movement holding sway over large manufacturing companies, then the 2000s were about the emergence of non-political unions, forged in the spirit of newly discovered amity between managements and workers across India.
Political unions are usually headed by an outsider, usually a politician. For instance, through the 1980s, one of India’s most popular union leaders was Michael Fernandes, brother of veteran socialist politician George Fernandes. Politicians are usually very careful about fomenting violence in unions. It is bad for politics, especially at a time when every state in the country is hard-selling itself to investors. Some experts say a politician at the head of a union usually acts a bit like a release valve in a pressure cooker, ensuring that enough steam is let off to prevent an explosion.
Santanu Sarkar, a professor of industrial relations and personnel management at XLRI School of Business and Human Resources in Jamshedpur, said there is no doubt that politically affiliated unions are more accountable because they are concerned about their image.
Only, in Maruti’s case, the company seemed happy with a union that had no political leaning or backing.
“In Maruti’s case, the company was against a politically affiliated union. In either of the cases, the management should have a neutral stance,” Sarkar added.
A non-affiliated union works some times.
Late last year, Maruti workers called off a strike after reaching a tripartite agreement with the management and the Haryana government. It later emerged that 30 workers, who had been the strike’s main leaders, were paid by the management to quit the company. The workers received a combined Rs 4.2-4.8 crore, Mint reported on 8 November.
And some times, a non-affiliated union doesn’t work.
Pravat Chaturvedi, a former labour secretary in the Union government, said the happenings at the Manesar plant last week would have likely remained non-violent if the protest had been led by a “seasoned” leader.
“With violence becoming the main issue, the rest of the problems have been sidelined, thus bringing no end to the problems, which started the protest,” he said. “This is the time when you need some experienced hand to guide these young workers, which the management never let happen.”
Like Chaturvedi and Sarkar, D.L. Sachdev, national secretary of the All India Trade Union Congress (Aituc), affiliated to the Indian National Congress, blames the management. “It was a kind of a pocket union in the hands of the company,” he said. “Every company likes to have a union like that. This union kept the workers in isolation, and that fuelled frustration.”
There’s also the theory—implicitly fuelled by the Maruti union’s request for a federal investigation—that the violence was fomented by external agencies, some with political affiliations, trying to gain entry into Maruti.
The Gurgaon-Manesar belt in Haryana is heavily industrialized, and both Aituc and the Centre for Indian Trade Unions (affiliated to the communist parties that make up the Left Front) would love to control the region where Maruti and its vendors alone have a combined turnover of at least Rs 60,000 crore.
Indeed, one cannot draw the generic conclusion that unions with political affiliations are better, said Prince Augustin, executive vice-president (HR) at Mahindra and Mahindra Ltd, who is also the president of the National HRD Network, an association of HR professionals.
In some cases, they have done a good job, he said. In others, the environment “has been vitiated by the external interference”.
Sachdev, however, denied that trade unions such as his were to blame. “I don’t find trade unions interested in these things,” he said, specifically referring to violent strikes. “To blame them is like hiding from reality.”
He is convinced that other factors are responsible for the eruption at Manesar that left one dead and as many as 100 injured. “The main reasons behind such protests are disparity in wages and bad treatment at the hands of management,” Sachdev said.
Wage malaise
Wages, work conditions and the temporary workers are a recurrent theme in the Maruti story. Last year’s strike at the company, which resulted in a revenue loss of Rs 2,500 crore, was driven by demands for higher salaries, better work conditions, and reclassifying temporary workers as permanent ones, a change that would have made them eligible for several benefits such as leave with pay and medical allowances.
The starting average salary for a so-called permanent worker at Maruti’s Manesar plant is Rs 17,000 a month, according to the company (those at the Gurgaon plant earn around Rs 20,000). A temporary worker earns a starting average salary of between Rs 6,500 and Rs 7,000 a month. Maruti’s Manesar factory has around 3,000 workers, of which 2,100 are temporary ones.
India’s manufacturing engine is driven by these temporary workers. Maruti has 4,000 of them; its rival, Chennai-based South Korean car maker Hyundai Motor India Ltd has 5,000; and French-Japanese combine Renault Nissan’s Indian arm, 8,000. These workers do pretty much the same work as their “permanent” peers, but are paid a much lower salary.
The ideal use of temporary or contract workers is to manage spikes in demand, but manufacturing companies in India use them for an entirely different reason, said former labour secretary Chaturvedi. “Companies hire contract workers for exploitation rather than bringing any flexibility to their production just because they come cheap,” he said. “By not giving them social security and proper working conditions, how do you expect them to be loyal to you?”
Indian law states that companies cannot hire a temporary worker to do a permanent worker’s job, but with most state governments quite happy to overlook this, companies use temporary workers for just about anything. Andhra Pradesh is the only state that clearly defines the jobs for which companies cannot hire contract workforce.
“Contract workers end up sharing the same work space with and doing the same jobs as the regular ones. Owing to the disparity in the pay structure and socio-economic status, there is a discontent among the contractual wokforce that may eventually culminate in a labour crisis,” said XLRI’s Sarkar.
Car makers have good reason to keep salaries under control, said an analyst.
“First, they are working in an extremely competitive environment and in such an environment, profit-making becomes a daunting task,” said Mahantesh Sabarad, senior vice-president (equity and research) at Fortune Equity Brokers (India) Ltd. “All kind of costs have gone up. From time to time, these companies raise prices of vehicles to churn out better profits.”
Maruti’s problems are deeper, he said, and added, “There are some internal policy-related hurdles such as import cost and royalty payments, which have gone up due to yen appreciation (in the case of Maruti specifically) and has affected their profitability.”
The wage bill of most car companies is kept in control by the large number of temporary workers, Sabarad said.
The salaries of Maruti’s permanent and temporary workers, which haven’t been revised since 2009, need to be seen in the context of rising inflation.
The Consumer Price Index (CPI) for Industrial Workers—which include food, children’s education, medical expenses and everything in the consumption basket of factory labour—has risen 9.36% in the last 14 months, squeezing household budgets.
“An average worker’s real wages are reflected through the Consumer Price Index. Even as the Wholesale Price Index has been moderating, CPI has been rather stubborn,” said K.R. Shyam Sundar, labour economist and professor at Mumbai-based Guru Nanak College. “This has been creating a resentment among the workforce. The real wages are not enough to sustain a living.”
To be sure, with the exception of Hyundai, which pays permanent workers an average of Rs 28,000-30,000, salaries at most car makers in India are largely the same. And temporary workers at some car makers earn as little as Rs 4,500 a month.
India’s archaic labour laws, which make it extremely difficult for manufacturing companies to fire permanent employees, are also to blame, Sarkar said.
“In the absence of adequate government intervention, companies have no choice but to do what they deem fit,” he said. “Hiring and firing the contract workforce is easier than doing the same with permanent workers, one of the reasons why we have seen a growing dependence on such workforce by the employers.”
And so, workers end up suffering because of the fallout of laws originally designed to protect their interests.
Disengagement malaise
A manufacturing plant is an ecosystem in itself. Real estate rates in the vicinity of the factory increase; small merchant establishments sprout; and locals find a way to make money off the factory, by vending either a product or a service or simply by leveraging higher real estate rates.
Maruti’s Manesar factory has just such an ecosystem, and on 23 July, members of local panchayats (village councils) gathered to express their solidarity with the company, which, rumours said then, was moving to Gujarat (the company’s own position is that it is expanding in Gujarat and that the Manesar plant will continue to function).
“The mahapanchayat at Dhanda (a village behind Maruti’s Manesar plant), which claimed to represent over 100 villages in the area, resolved to stand firm against the activities of trade union activists, and to set up a 21-member committee to interface between Maruti, the workers and local villagers,” The Hindu newspaper reported on 24 July.
“But why was the village intervening in an industrial dispute between a private company and its workforce?” it asked.
The answer is commerce.
At Dhanda and at other villages in Manesar and at villages such as Carterpuri (named after former US president Jimmy Carter who visited it in 1978 because his mother Lillian had worked there as a nurse in the 1960s) near the Gurgaon plant of Maruti, temporary workers drive the local economy. They live in small rooms in converted hostels run by local landlords and are aliens in an alien land.
They don’t feel a sense of kinship with a company in which they are but temporary workers. They don’t feel at home in the villages where they live and whose residents make a living off them. And, above all, they don’t feel they belong in industrial and modern India, represented for the temporary workers of Maruti and other companies in the area, by the glass-and-chrome malls of Gurgaon.
“We hardly go to the malls. It makes us feel low. It’s frustrating,” said Dharminder Singh, a contract worker at Maruti and resident of Carterpuri, quoted in a 5 November Mint story.
“When you earn Rs 6,700 a month, you cannot eat out or visit malls,” he added. “And, of course, (you cannot) feel on par with others.”
With regard to a 26 July, Page 1 story headlined ‘Social, economic undercurrents surface in Manesar worker unrest’, Hyundai Motor India said it doesn’t employ contract workers in core production functions. It has 1,110 contract workers connected to production functions, with the rest in support functions.
amrit.r@livemint.com
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First Published: Thu, Jul 26 2012. 12 27 PM IST
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